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Prevailing Wage Driving Up MTA Costs

The Metropolitan Transit Authority (MTA), has been in the spotlight of late due to astonishing articles published by the New York Times (NYT). The articles shed light on the massive amount of taxpayer money that’s being wasted on New York City’s subways.

A recent study by the Regional Plan Association (RPA) backed up the Times claims and further showed just how expensive MTA projects have become. The study looked at three different megaprojects to determine what factors are causing high construction costs. The RPA concludes that labor costs are the most divisive cost driver. The RPA cites a Turner and Townsend study, that found New York construction labor costs to be the highest in the world, reaching almost $100 per hour. These labor costs are directly attributed to New York’s Prevailing Wage Law.

What’s prevailing wage? Prevailing wage is the amount set forth in union Collective Bargaining Agreements covering at least 30% of workers in specialized trades. However, the mandated pay levels are neither prevailing nor limited to wages. According to the law, prevailing wage also includes high-priced fringe benefits. Many times, the fringes exceed the hourly pay a worker can receive. The fact is, this law is strangling New York’s economy by driving up the cost of public construction projects.

When looking at labor costs on MTA projects, the RPA researched publicly available prevailing wage data. They found that the MTA’s Line #7 megaproject, had trade labor costs between $757 million and $1.4 billion, totaling 45-83% of the total construction costs! The East Side Access, another MTA mega project, had labor costs totaling $1.6-$3.0 billion, which accounted for 22-45% of total construction costs. These costs are unlike anywhere else in the world. The RPA study compared the MTA megaprojects to similar megaprojects across the globe and found that New York’s labor costs are the highest. Specifically, the RPA compared the East Side Access project with a larger mass transit project completed in London, called the Crossrail project. On a per-track-mile basis, the manual labor hours on the East Side Access were half of that of Crossrail’s. Even so, the East Side Access labor costs more than doubled Crossrail’s costs. The difference in labor costs wasn’t because the Crossrail workers were cheated out of wages or had fewer benefits, it was in fact due to New York State’s insane Prevailing Wage Law.

So, what can be done? Short of repealing the law altogether, as 23 other states have done. A step in the right direction would be having New York State follow the remaining 26 States by adopting the federal standard of needing to represent 50% of the workforce in order to negotiate prevailing wages. Only New York has taken action to lower the standard to 30%. It’s time New York gets back in line with the rest of the country and follows the federal standard. That will allow New York to quickly rebuild our infrastructure and protect taxpayers from waste. The Empire State Chapter of the Associated Builders and Contractors demand that our State representatives support their constituents and reform the prevailing wage!

Click here, to view the study